Touher v. Town of Essex ( 2015 )

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14-P-796 Appeals Court
BRIAN M. TOUHER1 & others2 vs. TOWN OF ESSEX.
No. 14-P-796.
Essex. March 24, 2015. - August 10, 2015.
Present: Kantrowitz, Blake, & Massing, JJ.
Real Property, Lease. Contract, Lease of real estate, Unjust
enrichment. Personal Property, Ownership. Landlord and
Tenant, Fixture. Unjust Enrichment.
Civil action commenced in the Superior Court Department on
May 11, 2012.
The case was heard by Richard E. Welch, III, J., and
motions to alter or amend the judgment and for a new trial or to
amend the judgment were considered by him.
Christopher Weld, Jr. (Suzanne Elovecky with him) for the
plaintiffs.
Gregg J. Corbo for the defendant.
1
During the pendency of this appeal, a suggestion of death
was filed as to Paul Touher, and we allowed the plaintiffs'
assented-to motion to substitute Brian M. Touher in his capacity
as personal representative of the estate of Paul Touher.
2
Sarah Wendell and David R. Wendell, Jr., as trustees of
the David R. Wendell 1993 Revocable Trust.
2
MASSING, J. This appeal arises from a series of disputes
between the seasonal residents of Conomo Point and the town of
Essex (town), which owns and rents them the land on which they
reside. Four sets of plaintiff residents filed a complaint
seeking a declaration that they owned the buildings they had
erected on the town's land. After a jury-waived trial, a
Superior Court judge entered a declaration that two sets of
plaintiffs owned their cottages as personal property, but that
the more substantial homes that the two other sets of plaintiffs
had built were fixtures that belonged to the town. The
latter -- the decedent Paul Touher (Touher), and Sarah Wendell
and David R. Wendell, Jr., as trustees of the David R. Wendell
1993 Revocable Trust (the Wendell Trust) (collectively,
plaintiffs) -- appeal from that judgment, as well as the judge's
posttrial decision that they had no equitable claim against the
town to recover the value of the houses.3 Largely for the
reasons that the trial judge set forth in his detailed
memorandum and order, we affirm.
Background. 1. Historical perspective. For more than one
century, the town has been leasing desirable plots of waterfront
3
In a second case, a certified class of plaintiff
leaseholders, including the Wendell Trust and Touher, challenged
the town's assessment of the fair market value for them to rent
their land on Conomo Point. The judge decided that matter in
favor of the town, and the plaintiffs appealed. The issues are
addressed in a memorandum and order pursuant to our rule 1:28
issued this same day. Walker v. Essex, post (2015).
3
or near-waterfront property on Conomo Point -- once the location
of the town's "poor farm" -- to seasonal residents. The
lessees, at their own expense, built seasonal cottages on these
properties. In addition to the rent they paid to lease the
land, the residents were assessed and paid real estate taxes on
the cottages.
At various times the town4 has sought to alter its economic
relationship with the Conomo Point residents. In 1987, the town
took steps to increase the rental rates for the properties.
These efforts led to a class action suit in the Land Court (the
Pingree case5) that settled in 1991 with an agreement regarding
the rental rates, which was incorporated into a set of new ten-
year leases, each with a ten-year renewal option (the Pingree
leases). Two decades later, as the expiration of the Pingree
leases approached, the town sought to sever completely its
relationship with the Conomo Point residents. While the town
was considering a long-term plan for Conomo Point, however, it
decided to offer the residents short-term bridge leases,
allowing them to remain on the property for as many as five more
years.
4
The town by-laws establish a Conomo Point Commission
(commission), composed of the members of the town's board of
selectmen, to manage the Conomo Point properties. We refer to
the commission and the town interchangeably.
5
Pingree vs. Essex, Land Ct., No. 124-199.
4
To that end, the town successfully pursued a special act of
the Legislature to allow it to enter into bridge leases with the
residents, without the need to comply with the formal bidding
process mandated by G. L. c. 30B, § 16. On May 2, 2011, "An Act
Authorizing the Lease of Certain Property at Conomo Point in the
town of Essex," reprinted in full in the margin,6 went into
effect, authorizing the town to "lease for 5 years or less all
or any portion of its property known as Conomo Point, at fair
market value" and, if it so elected, to grant "a certain level
6
"SECTION 1. Notwithstanding section 16 of chapter 30B of
the General Laws or any other general or special law to the
contrary, the town of Essex, if first authorized by a vote of
its town meeting, may lease for 5 years or less all or any
portion of its property known as Conomo Point, at fair market
value, upon such terms and conditions as the board of selectmen
deems appropriate, in accordance with a bylaw adopted by town
meeting, which bylaw shall ensure that such leases shall be
undertaken in accordance with an open, fair and competitive
process, using sound business practices and principles of fair
dealing, which process may, but need not, recognize as a
criteria for evaluation for any such lease a certain level of
preference for current [lessees] of the property.
"SECTION 2. This act shall not exempt the town of Essex
from sections 3, 15 or 15A of chapter 40 of the General Laws,
sections 2-13.4 and 2-13.11 of the town bylaws or any other
general or special law which requires a vote of town meeting to
authorize the lease of real property.
"SECTION 3. This act shall take effect upon its passage."
St. 2011, c. 17.
The 2011 legislation used the word "leases," not "lessees."
In 2012, substantially similar legislation was adopted, with the
only difference being substitution of the word "lessees" for the
word "leases." St. 2012, c. 104, § 1.
5
of preference for current [lessees] of the property." St. 2011,
c. 17, § 1.
In anticipation of, and then following, the adoption of the
legislation, the town entered into discussions with
representatives of the residents. As part of this process, the
town issued a request for proposals, drafted with the residents'
input, for an appraiser to determine the fair market value of
the leases. Dissatisfied with the results of his report, the
resident group hired its own appraiser. After exchanging
appraisals and further negotiations, the town offered the
residents one-year leases for calendar year 2012, with a town
option to extend the leases for up to four one-year periods.
The leases included phased-in rent increases for the first three
years, with the rent for the remaining two years left to the
discretion of the town.
Also, in an effort "to resolve any disputes concerning
ownership of buildings or structures without resorting to
litigation," the town gave any resident who chose not to enter
into a bridge lease "the option of removing any such buildings
or structures at [the resident's] own expense." In all, the
town offered bridge leases to 121 residents; of these, 119
accepted, including the Wendell Trust and Touher. Thereafter,
fearing that the town eventually would seek to sell the land and
the structures, the Wendell Trust and Touher, along with two
6
other sets of residents, filed their complaint, seeking a
declaration that they owned their homes as personal property.
The plaintiffs now appeal from the judgment and from posttrial
orders in favor of the town.
2. The Touher and Wendell Trust structures. In 1962,
Touher leased an unimproved lot on Conomo Point from the town
for seventy-five dollars per year.7 The next spring he built a
small, two-bedroom, one-bathroom cottage. Following the
settlement of the Pingree case, with twenty years of leasing
guaranteed, he made approximately $120,000 in improvements,
adding a master bedroom, a laundry room, and other amenities,
nearly doubling the size of the original cottage.
In 1996, David Wendell, as then trustee of the Wendell
Trust, paid $175,000 to purchase a "large, impressive three
story house" on Conomo Point overlooking the Atlantic Ocean.
The town approved the prior owner's transfer of lease rights to
the Wendell Trust, as well as Wendell's plans to renovate the
house. Wendell has since passed away, but the Wendall Trust
continues to hold the lease for the property.
Discussion. "The general rule is that the erection of a
building on the land of another makes it a part of the realty."
7
By the time he exercised his option to extend his Pingree
lease for the second ten-year period, Touher's annual rent (for
calendar year 2002) had increased to $1,236.97, and it would
thereafter be adjusted annually to reflect changes in the
consumer price index for the city of Boston.
7
Meeker v. Oszust, 307 Mass. 366, 369 (1940). See Barnes v.
Hosmer, 196 Mass. 323, 324 (1907); Ward v. Perna, 69 Mass. App.
Ct. 532, 537 (2007). An exception applies where "there is an
agreement, express or implied, that the building will remain
personal property and that the owner of the building may remove
it." Ward v. Perna, supra.
The trial judge determined that the homes built and
occupied by the Wendell Trust and Touher were so affixed to the
land as to become the property of the town, and that the town
did not have an express or implied agreement with either of the
plaintiffs that the homes they erected were to remain their
personal property. The plaintiffs challenge both of these
determinations. If they prevail on either, they are entitled to
a declaration that they own the homes. "This is a mixed
question of fact and law," Noyes v. Gagnon, 225 Mass. 580, 584
(1917). But see Bay State York Co. v. Marvix, Inc., 331 Mass.
407, 411 (1954) ("[T]he intent to make [chattel] a part of the
realty may be established as a matter of law . . . but
ordinarily its determination requires a finding of fact");
Consiglio v. Carey, 12 Mass. App. Ct. 135, 138 (1981) ("The
question whether similar items were annexed, and therefore
realty, or unannexed and therefore personalty, has generally
been held to be one of fact"). "The burden of proof is upon
those who claim that it is personal property, to show that it
8
retains that character." Madigan v. McCarthy, 108 Mass. 376,
377 (1871).
1. Existence of an agreement. Taking certain of the trial
judge's findings out of context, the plaintiffs contend that the
judge actually found "there was an agreement that the residents
owned the structures and the Town owned the land." The trial
judge did state, "As a general matter, it is fair to conclude
that the residents understood that the Town owned the land and
that the initial, rather simple, cottages that were placed upon
Conomo Point were owned by the residents during the term of the
lease" (emphasis supplied). The trial judge further found that
the town required the renters to obtain town approval of their
building plans, acquiesced when the lessees occasionally sold
their structures to third parties, and at times referred to the
residents as "homeowners."8 The judge acknowledged that "these
8
We reject the plaintiffs' contention that the town is
estopped from denying that the plaintiffs own their dwellings
because the town took the opposite position in the Pingree case.
To the extent the issue of judicial estoppel was before the
trial judge, he acted within his discretion not to apply the
doctrine here. See Otis v. Arbella Mut. Ins. Co., 443 Mass.
634, 640 (2005) (decision to bar claim on ground of judicial
estoppel reviewed for abuse of discretion). The pleadings in
the Pingree case in which the town referred to the residents as
"owners" of their dwellings are documents signed by both parties
by agreement or stipulation as well as a notice of a proposed
settlement issued from the court. These documents cannot fairly
be characterized as the town "hav[ing] succeeded in convincing
the court to accept its . . . position." Id. at 641. Indeed, a
case that ends in settlement does not qualify as "success" for
the purposes of judicial estoppel. East Cambridge Sav. Bank v.
9
references evidence some understanding that the residents owned
their structures."
Nonetheless, on the pertinent question -- whether there was
an agreement that any structure would "retain[] its character as
personal property," Duquenoy v. Dorgan, 341 Mass. 28, 29-30
(1960) -- the judge found no express or implied agreement
concerning "what would happen to the structure at the end of the
lease should it not [be] easily removed from the land, or, in
other words, if the structure was affixed to the land. . . . On
this issue, there was no meeting of the minds between the Town
and the residents." We discern no error in that finding.
The voluminous record is devoid of any express agreement
that the Wendell Trust or Touher would own any structures they
affixed to the town's land. The plaintiffs point to language
repeated in several of their leases to the effect that the town
had the option to terminate the lease "in the event that a
dwelling house on the said lot during the term of this lease is
substantially destroyed by fire or other unavoidable cause or is
removed, [if] a dwelling house is not erected within one year
after . . . substantial destruction or removal" (emphasis
supplied). This language, which essentially makes the removal
of a dwelling house a breach of the lease, hardly gives the
Wheeler, 422 Mass. 621, 623 (1996). Chiao-Yun Ku v. Framingham,
53 Mass. App. Ct. 727, 729 (2002).
10
lessees permission to remove their houses, let alone addresses
the status of the houses if they become fixtures.9
Nor does the record evidence carry the plaintiffs' burden
to demonstrate an implied agreement between the town and the
Wendell Trust or Touher that their homes should remain personal
property if affixed to the land. "There are dicta in several
cases in this Commonwealth that an agreement for the right of
removal, or that the buildings shall remain as personal property
of him who erects them, may be implied from the fact that they
were erected by permission from the owner of the land." Meeker
v. Oszust, 307 Mass. at 369. While the town did require formal
approval of all the residents' building plans, and did in fact
approve the Wendell Trust's renovations and Touher's original
construction plans and improvements, this evidence could be
taken to mean that the town believed that it would ultimately
become the owner of any structures that were affixed to town
land. In any event, we need not decide whether an agreement
that the plaintiffs would own any affixed structures can be
implied from the town's approval of the plaintiffs' construction
9
By contrast, when Touher sought financing to build the
original cottage, he granted a security interest in the cottage
to the lender. The security agreement -- to which the town was
not a party -- recited that "by terms of a lease between the
borrowers and the Town of Essex, . . . the cottage building is
to remain personal property and not to become a part of the real
estate." This was not an accurate recital of any term of the
lease, but it demonstrates both the importance of an express
agreement (at least to the lender), and how to draft one.
11
or renovation plans. The trial judge found there was no such
agreement. As we discern no error of law or fact, the trial
judge's findings must stand. See id. at 372; Cavazza v.
Cavazza, 317 Mass. 200, 202 (1944).
2. Fixtures. In the absence of an agreement to prevent
the application of the general rule, the question remains
whether the Wendell Trust and the Touher places are fixtures or
personal property. If "chattel has been so affixed that its
identity is lost, or so annexed that it cannot be removed
without material injury to the real estate or to itself," Stone
v. Livingston, 222 Mass. 192, 194-195 (1915), then its character
as part of the realty "may be established as a matter of law,"
Bay State York Co. v. Marvix, Inc., 331 Mass. at 411.
Conversely, "articles which are manifestly furniture as
distinguished from improvements" are personal property. Stone
v. Livingston, supra at 195. See Consiglio v. Carey, 12 Mass.
App. Ct. at 139 (removal of chattel permitted where removal
"causes no material injury to the estate, and where the thing
can be removed without losing its essential character or value
as a personal chattel").
In the middle lie those cases in which the "intention [of
the party who attached the property] is the controlling fact and
where such fact is to be determined upon consideration of all
the circumstances, including therein the adaptation to the end
12
sought to be accomplished and the means, form and degree of
annexation." Stone v. Livingston, supra. "It is not [the
affixing party's] undisclosed purpose which controls, but his
intent as objectively manifested by his acts and implied from
what is external and visible." Bay State York Co. v. Marvix,
Inc., supra.10
The trial judge found that "Touher's expanded home is
indeed affixed to the land." It is built on concrete walls,
with a large fireplace and a concrete patio, all of which are
attached to the bedrock. Touher himself testified that the
house was "not built to be moved." The judge found that "[t]he
original portion of the Touher home cannot be separated from the
new addition without very substantial damage to the home," and
that "the remaining concrete foundation and patio could not
easily be removed."
10
Thus, looms in a textile mill, each weighing more than
one ton, and fastened to the floor by screws to keep them from
"wabbling" [sic] and moving around, were chattel and not
fixtures, as "the machines were not especially designed for use
upon the premises, were not peculiar in their pattern, were
easily removable without injury to themselves or to the
structure in which they were placed, [and] were equally adapted
for use in any other worsted mill." Stone v. Livingston, supra
at 193, 195. By contrast, a building "of large dimensions, so
constructed that it could not be removed from the premises
without a change in its structure at great cost; . . . built on
stone foundations, partly natural and partly artificial, to
which it was fastened by iron bolts; [with] a brick furnace and
chimney, also resting on a base set in the ground," was a
fixture. Talbot v. Whipple, 14 Allen 177, 181 (1867).
13
With respect to the Wendell Trust home, the judge observed,
"It would be difficult to conceive of anyone building such a
substantial three story structure with the intent to later move
it." It is affixed to the land "by a series of brick pilings
and with a small brick basement which goes into the land and
apparently rests upon bedrock," and is attached to two water
cisterns. The cisterns would have to be removed, and the brick
cellar, dug into the ground, would remain if the structure were
moved.
The judge accepted the plaintiffs' expert's testimony that
either of these structures could hypothetically be moved, and
that it would be possible to repair the significant damage that
would be done to the property, although the judge noted that
such a process would likely damage the structures as well. We
disagree with the plaintiffs' contention that the evidence
supports only the conclusion that "both can be moved without
material damage to the land or the homes." The judge properly
considered all the relevant factors, and his ultimate conclusion
that the structures are affixed to the land is neither wrong as
a matter of law nor clearly erroneous as a matter of fact. "It
is difficult to see in what manner a building could be more
effectually annexed to the realty than the [two] in
controversy." Talbot v. Whipple, 14 Allen 177, 181 (1867).
14
3. Unjust enrichment. Finally, the Wendell Trust and
Touher argue that the trial judge erred in rejecting their
claims that they are entitled to recover the value of their
homes under a theory of unjust enrichment. While we, like the
trial judge, have "some sympathy with that argument," the judge
did not err. He correctly distinguished the plaintiffs' claim
from the circumstances of Ward v. Perna, 69 Mass. App. Ct. at
538-540, where the tenants made improvements to their cottage,
affixing it to the land, as a result of a misrepresentation that
they would be given the opportunity to buy the underlying land.
The town asserts that "[o]ne cannot, merely by erecting a
house on the land of another, compel him to pay for it, even if
the land is benefited by the erection of the structure."
Salamon v. Terra, 394 Mass. 857, 860 (1985), quoting from
O'Conner v. Hurley, 147 Mass. 145, 148 (1888). This principle
does not apply in full force here, as the plaintiffs' homes were
built under agreements with the town. "[W]hen one has come into
possession by license or contract, the relative rights and
obligations of the parties may be adjusted, and in legal
contemplation are taken to be adjusted and regulated by the
terms of the contract." Mason v. Richards, 15 Pick. 141, 143
(1833).
Here, Touher built and the Wendell Trust bought their homes
with eyes wide open, and in the light of the well-established
15
rule that the erection of a building on the land of another
makes it a part of the realty. They enjoyed the use of the land
and the dwellings for many years; indeed, they continue to do so
today. While a claim of unjust enrichment may not require fraud
or misrepresentation, in the circumstance of this case, it
cannot be said that the town's retention of the structures is
"against the fundamental principles of justice or equity and
good conscience." Ward v. Perna, supra at 540 n.11, quoting
from Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005).
Judgment affirmed.
Orders denying motions to
alter or amend judgment, or
for a new trial or
amendment of judgment,
affirmed.